While the version in the KB didn't matchup, I did check msdb.dbo.syssubsystems and found that the BINN directory listed inthe paths was missing in action. Somebody else did a reinstall of SQL2K5 on the box and I think the registry or MSDB didn't get updatedwith the new path.

As a test, I copied over the BINN directory from mssql.3 to mssql.1 and restarted SQL Agent. The jobs now run without error. Probably a better way to fix this but it's Saturday so this will do for now.

Just to add to the discussion, we had the same issue. We ran: select * from msdb.dbo.syssubsystems and noticed that the subsystem dll path was incorrect. Our path read mssql.7, instead of mssql.1, because this instance had been the second named instance on the server. It is now the only instance on a new server, but the paths were not properly updated.